Gold rises as markets brace for Fed meeting

[BENGALURU] Gold prices gained on Monday ahead of this week's US Federal Reserve monetary policy meeting, which is expected to lead to a cut in US interest rates.

Spot gold was up 0.4 per cent at US$1,423.49 per ounce, as of 0121 GMT.

US gold futures gained 0.3 per cent to $1,423.20 an ounce.

Market participants are now awaiting the US central bank's July 30-31 monetary policy meeting, where it is expected to trim its interest rate by at least 25 basis points.

Interest rate futures are fully priced for a quarter-point rate cut from the Fed on Wednesday, with only a small chance of a half-point move.

US economic growth slowed less than expected in the second quarter according to a Commerce Department report on Friday, making the Fed less likely to cut rates by 50 basis points given the economic improvement.

Better than expected US data lifted the US dollar to a two-month high versus a basket of currencies on Friday, and held firm near that level on Monday.

US and Chinese trade talks are shifting to Shanghai this week, as negotiators from both countries meet for their first in-person talks since a truce at G20 last month. Expectations are low for a breakthrough.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14 per cent to 818.14 tonnes on Friday from 819.32 tonnes on Thursday.

Hedge funds and money managers reduced their bullish stance in Comex gold in the week to July 23, the US Commodity Futures Trading Commission (CFTC) said in a report on Friday.

Consumers in leading Asian hubs sold back physical gold last week looking for profits, switching over to cheaper silver as the preferred investment.

An emergency meeting with parties to Iran's 2015 nuclear deal was "constructive" but there are unresolved issues, and Iran will continue to reduce its nuclear commitments if Europeans fail to salvage the pact, an Iranian official said on Sunday.

REUTERS